Time preference, stock externalities and strategic reactions: policyimplications in climatic change

This paper examines the relationship between the rate of time preference and strategic reactions in dealing with climate change caused byanthropogenic greenhouse gas (GHG) emissions. Treating climate change as stock externalities, the RICE model (Nordhaus and Yang [1996]) is employed in this paper for simulation studies. The simulation results show that when regions' rate of time preference in evaluating climate change is sufficiently low, the paths of efficient GHG emission reduction measurement and the inefficient Nash equilibrium outcome areclose. The paper also provides general interpretations of such phenomena. Finally, the implications of a low rate of time preference on GHG emission reduction policies are discussed. [ABSTRACT FROM AUTHOR]